Borrowers favour a shorter fixed rate period
Data from the Bank of England shows that UK borrowers are currently favouring two-year fixed-rate deals.
In Q2 of this year, half of new mortgages were two-year deals, with only 35% opting for five-year terms. Borrowers are probably hoping to remortgage to a cheaper deal if Bank Rate keeps falling over the next two years. This marks a change in attitude since 2022 - interest rates were beginning to rise, so buyers were hoping to keep mortgage costs low by choosing a five-year fixed deal.
A longer mortgage deal is still worth considering, despite hopes that interest rates will ease in the coming years. Analysts do not anticipate mortgage rates to fall to the record lows seen in 2021; instead, they expect that mortgage rates will settle at a higher level, potentially around 3.5%. Also, potential cuts to Bank Rate are taken into consideration when pricing fixed rate mortgages, so some experts believe that current rates are the best that we will get for a while.
Deciding on your next move? It’s essential to seek advice so you can make an informed decision about the mortgage deal that’s right for you.
Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage
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